Principal Financial Group, a firm that's leveraged partnerships with local financial heavyweights to build its asset management business in Asia, boosted its stake in its Southeast Asian joint venture this year and bought out the partner in its Indian JV.

Executives with the Des Moines, Iowa-based firm said while Principal remains open to taking bigger stakes in its partnerships in the region, its "marriages" will remain central to the firm's strategy for building retirement savings and retail businesses in key markets, including China and Southeast Asia.

"The ability to partner and partner well is a core competency," said Thomas Cheong, Principal Financial's Hong Kong-based president, North Asia, in an Aug. 2 interview.

Mr. Cheong is Principal's point man for the firm's biggest relationship in the region: CCB Principal Asset Management Company Ltd., the $155 billion joint venture the Principal established in 2005 with Beijing-based financial giant China Construction Bank.

Principal maintains a 25% stake in CCB Principal, the maximum a foreign partner was allowed to obtain at the time the entity was established.

Kirk West, executive director, head of international offices and CEO Asia of the group's $451.2 billion money management arm, Principal Global Investors, in the same interview said the combination of PGI's global offices, joint venture partners and other strategic alliances makes for an "incredibly broad distribution footprint."

With key relationships such as CCB Principal and CIMB-Principal Asset Management Berhad — the $20 billion, Kuala Lumpur-based joint venture Principal established in 1995 with Malaysian investment banking heavyweight CIMB Group — not consolidated in Principal Financial's asset management totals, painting a comprehensive picture of the U.S. firm's asset management business in the region is no simple task.

Mr. West said Principal's broader asset management business in the region is firing on all cylinders now, even if assets under management in some key markets have slipped over the past year or two.

For example, in the two years through June 30, PGI's assets under management for clients based in the Asia-Pacific region dropped 15%, or $5.8 billion, to $32.4 billion, largely reflecting some big U.S. investment-grade credit mandates being pulled by institutional clients in Japan as the costs of hedging an appreciating U.S. dollar back to yen eliminated the pickup Japanese investors had enjoyed, said Mr. West.

Those outflows were offset by mandates commanding higher fees for strategies in areas such as high-yield bonds and alternatives, he said. Meanwhile, CCB Principal's and CIMB Principal's assets under management stand at record levels now, said Mr. West.

"We're not defending turf. We're gathering new territory," he said.

Some of Principal's biggest opportunities to gain market share in Asia now will come from "making sure we're collaborating in the best possible way" with those joint ventures — for example, by offering strategies focused on developed-market stocks, bonds and real estate to investors in Southeast Asia looking to boost allocations to overseas assets and to investors in China likely to do so in the near future, said Mr. West.

Win Phromphaet, CIMB-Principal Asset Management's Bangkok-based chief investment officer for Thailand, in the same Aug. 2 interview, said being able to tap PGI's expertise — whether in bringing the first target-date funds to the Thai market four years ago or being able to offer Thai clients a China A-shares strategy managed by PGI — has helped double the Bangkok office's AUM to $5 billion in the past three years.

Principal Group executives predicted their tie-ups with banking heavyweights like CCB and CIMB could end up being more akin to marriages than temporary alliances.

Mr. Cheong said he doesn't buy the argument that CCB executives will look to learn what they can about asset management from Principal and then move on, noting that financial heavyweights in China, like their counterparts overseas, increasingly are focusing on their core competencies. The Chinese banks "have realized that they can't be all things to everybody and they're beginning to restructure a lot of their business to focus on key areas," he said.

"The decision you often end up having to make is, do you prefer to have a small piece of a big pie or a big piece of a small pie," said Mr. Cheong. "I think where we've landed in many of the big markets is that a small piece of a big pie is actually much more valuable."

The same logic can apply to Principal's joint venture partners, possibly explaining CIMB's decision at the start of 2018 to allow Principal to buy an additional 20% interest in CIMB Principal, giving the U.S. firm a controlling 60% stake.

Mr. West said while Principal had long been interested in obtaining that bigger stake, CIMB's decision was likely based on the realization that its core competency is running a bank. With Principal's acquisition of a controlling stake, the venture comes under a more flexible regulatory environment than it had as a bank affiliate, with other benefits in terms of the ability to be more nimble in areas such as acquisitions or product development, he said.

It was a "very big decision" from CIMB's perspective because it has such a "significant and well-trusted brand, not just within Malaysia but across (the Association of Southeast Asian Nations), so they had to feel comfortable that we were going to be the right partner for them to really give over a little bit more of that day-to-day control and run it within an asset management culture," said Mr. West.

Patrick Chang, Kuala Lumpur-based chief investment officer of CIMB-Principal Asset Management Malaysia, who joined the joint venture from the CIMB side, said that "it's all about value creation from a shareholder's point of view."

The DNA of the CIMB Group "will always be in banking," said Mr. Chang, in the Aug. 2 interview. Moving to the new ownership structure at a time when CIMB Principal is moving beyond managing Malaysian equities and fixed income, to regional equities and fixed income and now to global strategies makes sense in terms of fielding the ever-broader array of investment strategies clients are demanding, he said.

Over the past two or three years, the Malaysian operation's AUM has surged to almost $5 billion from $2 billion, he said.